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Another building company collapse

Michael CogganUpdated
Mon 19 Apr 2010, 4:01 PM AEST

Renewed calls for building indemnity insurance to protect people building homes in the Territory.

Transcript

MELINDA JAMES, PRESENTER: The Territory Planning Minister is expected to be in Alice Springs this weekend to hear the grievances of people caught up in the collapse of a residential builder. Carey Builders went belly-up last month leaving the owners of 13 partially-built houses out of pocket to the tune of hundreds of thousands of dollars. The failure of yet another builder has added fuel to the Opposition's calls for stronger protections for consumers. But there's still no sign of when the government will introduce a long promised insurance scheme. Michael Coggan reports.

MICHAEL COGGAN, REPORTER: Chris and Rebekah Axe's dream of building a new life in Alice Springs has suffered an expensive setback. The house they were building is one of 13 left partially completed in the wake of the collapse of Carey Builders. Because the Northern Territory has no building indemnity insurance scheme, they've lost tens of thousands of dollars.

REBEKAH AXE, ALICE SPRINGS: We love the Northern Territory. We wanted to come to the Northern Territory, wanted to have our family to grow up here, want to be in this house before our kids are born and that's something we're working on. And to find out there's no indemnity insurance in the Northern Territory whereas you can get that pretty much anywhere else you go in Australia. And we've gotta foot the bill. There's nothing else, we talked to the liquidators and they said, they said, Don't get your hopes up there's not much money there.

MICHAEL COGGAN: Carey Builders are the third Territory residential construction company to go bust in the past six months. The Territory Government has initiated legal action against the builder Randal Carey, alleging he wasn't properly licensed. But the Axe's will have to find more money before they can get into their new home.

CHRIS AXE: This is our house and it's painted, the tiles are in, but none of the electrical fixtures. No kitchen is in, there's just a bathtub in there and the bathroom no tiles down in the bathroom either.

REBEKAH AXE: None of the fittings are in the bathroom except for the bath. We still have the driveway and the carport, the back verandah and fencing to go up. That's too much to be covered by the $16,000 we've got left.

MICHAEL COGGAN: Builders indemnity insurance - protecting consumers against the collapse of residential builders - has been on the Territory government's agenda for the best part of the past decade. It was preparing to introduce a scheme in 2008 but problems with interstate schemes put that plan on hold. A recent Senate Inquiry pre-empted changes to the way the insurance schemes operate. Tasmania has put an end to mandatory insurance and New South Wales has introduced a government backed scheme with Victoria set to follow suit.

GRAHAM KEMP, MASTER BUILDERS ASSOCIATION: Only in the last six months we've seen two major underwriters withdraw from the market which has only now left two underwriters left in the market to continue with the current insurance products.

MICHAEL COGGAN: The Master Builders Association has its own insurance business. And it considers the Territory too small a market to offer a home warranty product.

GRAHAM KEMP: Probably the market here is not viable for a private insurer to be part of and it may well rely on the Northern Territory Government to set some direction.

ADAM GILES, CLP MLA, ALICE SPRINGS: We know that there have been issues with that scheme in other jurisdictions. However, other jurisdictions do run a home warranty insurance scheme that protects people who are building their homes for when the builder goes bust, so that those people aren't left in financial and emotional ruins when they're trying to build the biggest asset that they will probably ever built for their family.

MICHAEL COGGAN: Opposition MLA Adam Giles is working with the homeowners caught up in the Carey Builders collapse and he's pressuring the government to set up an insurance scheme and other protections for consumers.

ADAM GILES: It's also important for the Northern Territory Government to have a good hard look at their licensing processes to ensure people like Randal Carey have appropriate background checks put in place in the future so that we don't get to this position. Because the first two hurdles in both licensing and de-licensing this builder will fail to have been jumped by the Northern Territory Government and that's why they are liable in this situation.

MICHAEL COGGAN: The Department of Planning has been offering advice to people left with partially finished homes. But there's no financial support available.

FABIO FINNOCHIARO, DIR. BUILDING ADVISORY SERVICES: The advice we're giving them is giving them advice about talking to their building certifier, talking to other builders that are coming into the process, what needs to happen from here. We are also encouraging them to talk to their lending institutions so that they might be able to assist, so they know where they're at.

MICHAEL COGGAN: In the meantime the government is going ahead with plans to introduce an insurance scheme later this year.

FABIO FINNOCHIARO: Home warranty insurance has been in a state of flux over the last few years Australia wide and there has been continual change in terms of product providers and the product availability and the likes, and the Territory Government's concerned or wants to ensure that in fact we get a product that is effective and suitable for the Territory.

MICHAEL COGGAN: But that's little comfort for Bharat Desai. He was forced to find another builder to finish his house in the Darwin suburb of Lyons after the collapse last year of Augusto homes.

BHARAT DESAI: I had to borrow another $180,000 on top of that to finish the job and I got a few quotes and this was the best quote I got.

MICHAEL COGGAN: Bharat Desai says his request for an interest free loan was rejected and he says he wouldn't attempt to build another home in the Territory until more protections are in place for consumers.

BHARAT DESAI: Even though I'm burnt in this whole scenario I think this has to be brought in where the investors like me are protected, otherwise I think it's going to creative a lot of other builders and builders not experienced, to go under.